My Bio and This Blog's Purpose

Wednesday, June 11, 2014

Let's Rescue the Northeast Corridor

Fred Frailey hit the nail on the head about the Northeast Corridor in the May issue of Trains Magazine: The answer is in front of us! I will now dissect Frailey's best quotes.

Acquiring the Boston-Washington railroad in 1976 saddled Amtrak with a monster...Revenues fund only a small part of the line's capital needs and Congress punts ever year. The result? The line is steadily deteriorating.

When it comes to lack of congressional funding, what does one expect? Congress's refusal only demonstrates that a new way is needed to fund passenger rail infrastructure--pronto. The Ford Administration did a real disservice to passenger rail by not letting the USDOT own the 457-mile line. Given how much of a financial money pit the NEC is, now is the time to let Amtrak worry about running the trains while letting someone else fix the tracks and replace obsolete bridges and tunnels.

Investment banker Ignacio Jayanti, formerly of J.P. Morgan and now president of Corsair Capital, a private equity firm, outlined the essential elements of this approach in 2011 before the House Committee on Transportation and Infrastructure. As he explained it, Congress would divide Amtrak into two government-owned parts.

This proposal is exactly what Amtrak needed in 2011--and still needs today--but the main problem was that the issue was muddied from the very beginning as the vast majority of the rail community yelled "privatization" at any idea that would have stripped Amtrak of owning the corridor. Even though Rep. Mica did propose a fully privatized Northeast Corridor, no one really paid attention to Jayanti's common sense compromise.

Enabling legislation would mandate the Surface Transportation Board to award a 50-year lease to a company to manage the infrastructure. It would be financed by $2.5 billion of capital that the management company would raise a $25 billion RRIF loan, a low-interest program administered by the Federal Railroad Administration.

Everyone is always complaining about the decrepit state of Amtrak's crown jewel but yet they either have no solutions or want those same unwilling feds to give the national operator hundreds of billions. A government-owned infrastructure company will be able to solve the problems with various Northeastern tunnels like the ones in Baltimore.Just over a month ago, Amtrak's own boss said that the Hudson River tunnels had up to 20 years left. If we want to be a great nation once again, now is the time to be proactive rather than reactive. Europeans on the British Isles and the continent have handled the separation of infrastructure quite well, and it's time that the northeastern United States follows suit before it has a major disaster on its hands not unlike the Twin Cities seven years ago.Instead of arguing of whether to build a tunnel through Penn Station or a so-called "tunnel to Macy's basement," the rail community has to have an honest discussion of NEC funding because Amtrak's 38-year ownership has been its #1 detriment, and given the politics in New Jersey (with New Jersey Transit proposing a dead-end tunnel to Manhattan [maybe as George Warrington's way of getting back at Amtrak] and Governor Christie cancelling plans to build said tunnel four summers ago), letting another federal government organization would eventually lead to better rail service and give the nation the high speed service everybody desires at a much lower cost.

If this is such a great idea, you're probably thinking, why hasn't Congress embraced it? The reason, I suspect, is that people hate change. Amtrak likes to control the NEC. Unions feel comfortable with the status quo. Politicians don't want to stick their necks out.

Frailey is spot on again. Amtrak and its various advocates have the harebrained mindset that if it doesn't own the NEC, then the company won't be a real railroad. When it comes to any rail reform, the unions have shown to be not only complacent but also impeding progress because Jayanti's idea would result in everybody in keeping their jobs should the separation go into effect. I'd also argue that both Amtrak and the new infrastructure owner would add jobs since the railroad and the NEC owner would need newer people to help the experienced workers at both entities.As the 457-mile line slowly crumbles, it's time that someone on Capitol Hill or from the White House steps up to revive the Jayanti proposal before Amtrak's opponents legislate the agency out of existence--or there is a total meltdown on the NEC.